Good day and thank you for standing by. Welcome to the Avista Corporation Q3 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Stacey Wenz, Investor Relations Manager. Please go ahead.

Thank you, Therese. Good morning. Welcome to Avista's third quarter 2024 earnings conference call. Our earnings and third quarter Form 10-Q were released pre-market this morning. You can find both on our website. Joining me this morning are Avista Corp’s CEO, Dennis Vermillion, President and COO, Heather Rosentrater, Senior Vice President and CFO, Treasurer and Regulatory Affairs Officer, Kevin Christie, and Vice President, Controller, and Principal Accounting Officer, Ryan Krasselt. Today, we will make certain statements that are forward-looking. These involve assumptions, risks, and uncertainties, which are subject to change. Various factors could cause actual results to differ materially from the expectations we discussed in today's call. Please refer to our Form 10-K for 2023 and our Form 10-Q for the third quarter of 2024, which are available on our website for a full discussion of these risk factors. I'll begin with a recap of the financial results presented in today's press release. Our consolidated earnings for the third quarter of 2024 were $0.23 per diluted share, compared to $0.19 for the third quarter of 2023. Year-to-date, consolidated earnings were $1.44 per diluted share, compared to $1.14 last year. Now, it's my pleasure to hand the call over to Dennis.

Well thanks, Stacey, and good morning, everyone. It's great to be here with all of you. This is my final earnings call as CEO of Avista. As you know, Heather Rosentrater will be taking over as CEO on January 1st of next year, and I have every confidence in Heather. Throughout her career, she has demonstrated the values, the strength, acumen, and insights to position us for success. She is the right person to lead Avista into the future. I've been honored to lead this company and serve alongside exceptional and dedicated employees for nearly 40 years. Our employees make Avista such a special place to work, and witnessing firsthand our ability to rise to meet challenges together as a team is something I will truly miss as I retire. Throughout my five years as CEO, we've made significant progress with our regulatory strategy, making meaningful progress towards closing the gap of regulatory lag, even as we found creative ways to minimize the impact of rate increases for our customers. Serving customers is the heart of our business, and in the last five years, our team has grown our programs for targeted energy assistance from a level of $11 million to nearly $40 million a year. More importantly, we are providing that assistance to more customers than ever. We've also invested more than $2 billion in our system on behalf of our customers in the last five years. The team has done a remarkable job seeking out state and federal funding for projects that matter to our customers. Avista has been awarded over $90 million in state and federal grants in the last five years. We continue to seek out these funding opportunities because it's the right thing to do for our customers. It enables us to accomplish more work…

Thank you, Dennis. And I want to start by expressing my heartfelt thanks and gratitude to you, Dennis, for your leadership, guidance, and unwavering support for our company. Your long tenured career is truly remarkable, and we are all so fortunate to have had you at the helm during some of these unprecedented times. And as highlighted, the progress and successes achieved through your leadership are noteworthy and have benefited our customers, communities, and investors. And you will definitely be missed. I also want to share that I'm honored to be stepping into this role. My family's roots in our service territory extend back to the founding of Avista over a 135 years ago. So that makes it all the more meaningful to me. And now turning to our operations, I'd like to share some updates. I'm pleased to announce that we are officially out of wildfire season. We've received significant rain in the last few weeks and took all of our circuits out of fire safety mode as of October 17th. Public Safety Power Shutoffs, or PSPS, were added to our wildfire toolkit in 2024. And in late September, we experienced conditions that required the use of the PSPS tool on one of our circuits. All of our planning and work to establish coordination with community resources paid off. We successfully deployed resources to the affected area. And once it was safe to do so, we were able to quickly restore service to our customers that same day. Another success story from our wildfire mitigation efforts in 2024 was the deployment of nine artificial intelligence enabled fire detection cameras. These cameras detect wildfire smoke up to 10 miles away and send alerts to appropriate resources. We've deployed them strategically throughout our service territory to maximize the views of several…

Thanks, Heather, and good morning, everyone. Dennis, I'd like to start by congratulating you and Mo on your retirement. It has been my extreme privilege to report to you for almost my entire 19-year career here at Avista. You stepped into the CEO role right before the COVID pandemic, and wow, what a ride it's been. Dennis has been exactly the leader this company required during the pandemic and over the last several post-pandemic years. The investor community likely hasn't had the opportunity to see Dennis's belief in the importance of the right culture for the company. He's had a laser focus on both preserving the best parts of our culture while continuously improving it as well. And that focus has made such a positive difference. Dennis is also incredibly thoughtful, warm, easy to talk to, and above all, loyal. He's loyal to our investors, customers, communities, and employees, and has strived for the best outcomes for all. I wish you the very best, and you will be greatly missed. I'm also extraordinarily excited for Heather as we move into a new era. We are in very good hands, and she is the perfect choice to replace Dennis as we look toward the future. Now, turning to our earnings, Avista Utilities results for the third quarter and year-to-date show continued improvement from 2023. This is largely due to the effects of our general rate cases. In the third quarter, we recognized a pre-tax expense of $3.2 million under the Energy Recovery Mechanism, or ERM. Power supply costs came in a little higher than we expected, and year-to-date, we recognized a $7.8 million pre-tax expense under the ERM. AEL&P's results for the third quarter were in line with our expectations, and they're once again on track to meet their full-year earnings…

Thank you. [Operator Instructions] Our first question comes from Julien Dumoulin-Smith from Jefferies. Your line is open.

Yeah. Hi, it's actually Brian Russo at Jefferies. Good morning.

Good morning, Brian.

Hey, just on the announcement of your participation in the North Plains Connector, what are the upcoming milestones that we should be aware of for you to finalize the non-binding MoU? And then just more specifically, how does that fit in with the integrated resource plan you just filed in terms of longer term capacity needs, reliability, et cetera?

Great. Thanks, Brian. I'm happy to answer that. And yeah, we're very excited about taking this next step. That is an important piece of our integrated resource plan and having access to additional markets and high load factor wind facilities in the Midwest. So it is a key piece of our future resource needs. And the next steps include development of definitive agreements, probably in the next six to nine months. And then we will continue identifying next steps from there. So that's the next near term step.

Okay. And I think according to your press release, it doesn't seem like there's any financial commitment from Avista until the project is operational. Is that correct?

There will likely be some payments earlier, smaller, but the majority would be potentially after it's energized.

Okay, great. And then the upcoming RFPs for new generation, I think you referenced 2029 and the scenarios of self-build, build on transfer, et cetera. Is there anything different in this RFP versus past RFPs where there seemed to be limited outcomes for Avista-owned generation relative to the PPAs that the company has signed in the past? Just trying to get a sense of maybe what the size of these RFPs are and when will final bids be due, et cetera?

I don't think we have the details related to when final bids will be due in the RFP, but it will be in early 2025 is when we'll go out for it. And related to self-build and build transfer options, the tax implications have changed with the IRA, and so we do feel that there'll be more competitive options related to us having ownership in certain projects.

Okay, great. And then lastly, just on the ERM and the volatility and the expense year-to-date, just bigger picture, are there ways for Avista to optimize the generation portfolio more going forward and possibly adding more company-owned generation? Is that one solution to managing what seems to be ongoing volatility with your power supply costs?

Hey, Brian, it's Kevin. Thanks for the question. I'm happy to take that one. And I'll start by talking about the ERM itself and our regulatory proceeding. As you know, we have filed for and we made some modifications during the pendency of the case to significantly change the ERM and the financial impact that would have on us. I think our team does a great job of optimizing our resources to the best of our ability. And at the same time, power supply dynamic in the Pacific Northwest has changed significantly. And with that change, I think a change of the ERM is appropriate. They'll keep optimizing our resources. And I think if we have more resources that we directly own, that would help too. But I think the biggest impact is the change to the ERM.

Okay, great. And good luck in the future, Dennis. Appreciate it. Thank you.

Thanks, Brian.

Appreciate it.

Thank you. [Operator Instructions] Our next question comes from Anthony Crowdell with Mizuho. Your line is open.

Hey, good morning. And Dennis, I echo Brian's comments. Best of luck in your next endeavor. Just one question I was having was just on the other segment. I think it's now flipped to a loss for the year for 2024. Just if you can give us more detail on the $0.04 to $0.06 loss, is that mainly a mark-to-market on the unregulated business there?

Yeah, that's correct. Anthony, it's Kevin. Nice to chat with you. And yeah, I think it's worth taking a minute to talk about that other segment given the change in the guidance that we have there. It is around mark-to-market and the valuations haven't materialized as we discussed in our comments. I think it's important to also remember that it's a very small but important piece of our business. When we look at that other segment, it's just 2% when you compare original guidance for utility versus the non-reg side. The clean-tech market has improved. It's a little bit more volatile, certainly, but I'm seeing some pretty good signs that we could see exits and improve valuation down the road. It's also important to remember how strategic the investments are and the benefit that it brings back to the utility. We really do think that this is a strong investment for us as we're better positioned to be that utility of the future. So although there were some headwinds this quarter and this year thus far, we think that 2025 and beyond look pretty good.

Great. And then the last question I have, I guess, is on the state itself, on Washington. And I just don't know the results. I think there were two initiatives or ballot initiatives, maybe the right description, on maybe bringing gas into homes. And I apologize, I forgot the other one. Do you know how those fared in the election yesterday?

Yeah, Anthony. The two were I-2117 and I-2066. So the 2117 was or is the repeal of the CCA, the Climate Commitment Act. And that one has failed. So the Climate Commitment Act, which is the carbon trading, cap-and-trade program in the state of Washington that will stay in place. The other one, the 2066, is the energy choice one that you're referring to. And that one, it has a slight lead. And so, but it's too early, it's too close to call. There's still a lot of uncounted votes in the state. And so we really don't have a sense for where it's going to end up. Should know probably by the end of the week, I would guess. But it's pretty close. And there's still, I think there's still like 700,000 ballots, last I heard, that's still to be counted in the state of Washington. So stay tuned on that one.

Stay tuned. Well, thanks so much. Appreciate your time and looking forward to seeing you guys in Florida.

Great. Thanks.

Thank you. Our next question is from Sophie, excuse me, Sophie Karp with KBCM. Your line is open.

Hi, guys. Good morning. Thank you for taking my question.

Good morning.

Yeah. So maybe could you talk a little bit about the wildfire season now that it's kind of in the rear view mirror? Lessons learned, like did you have to do PSPS and kind of what you learned from that? And also the tackle on that, are there any legislative initiatives with respect to wildfire response liabilities that you could be pursuing in the upcoming legislative session in Washington? Thank you.

Yeah, Sophie. This is Heather, I'm happy to answer that one for you. And we had to do a lot of work in the off season preparing for wildfire season. And so we had prepared with public safety power shutoff tool in our toolkit. And in late September, we did have a condition that caused us to move one of our circuits. It was about 1500 customers on that circuit that experienced a public safety power shutoff. But all of the work that we had done to coordinate with our agencies to communicate and make customers aware of that and just internal planning resulted in us being able to restore customers that same day once conditions were safe. So we were able to learn a lot and be able to minimize the impact to customers through that. So we felt like we had a pretty successful wildfire season this year in implementing the additional tools and resources that we put into place. And now we're back into that planning season and looking forward. And some of the things that we're focused on are adding weather stations in our higher risk areas. We used manual weather stations to support us during this last wildfire season. And then a lot of focus on undergrounding and covered conductors as well. On the legislative side, we have a team that's been putting a lot of work in to move that forward and working with other utilities and other partners, stakeholders in Washington and in Idaho. And we are planning on moving forward legislation in both states in this upcoming legislative session.

Great. Thank you so much. Very helpful. Appreciate it.

Thanks.

[Operator Instructions] I'm showing no further questions at this time. So I would now like to turn it back to Stacey Wenz for closing remarks.

Thank you all for joining us today and for your interest in Avista. Have a great day.

This does conclude the program. You may now disconnect.